J&J Case Study

Introduction

Johnson and Johnson are described as the world's largest and most comprehensive healthcare manufacturer. The organisation holds divisions across consumer markets, pharmaceutical and professional medical markets. Their worldwide sales grew 14% from 2007 to 2008 and the adaptation of an entrepreneurial model ensures the business retains the market leading position.

Reasons for Success

Key success factors for the business can be seen across both product and operational faculties. Within product focused areas the level of brand ownership for Johnson and Johnson dominates the consumer market place on a global scale. This level of exposure coupled with the marketing and PR made available for these brands results in a strong domestic market.

Whilst within medical markets Johnson and Johnson carry out extensive work on development for generic medicines which can be used to take the place of branded drugs when the patents which protect the brand ultimately end. This market is highly competitive and focused for research and development teams to ensure they are the first to market with the new cheaper generic alternative as it if often the first to market who secure the highest market position. This can be highly important for example if the patented brand due to end is owned by Johnson and Johnson the result of introducing the first generic would be retention of market share and profitability.

Although it is important to retain key focus on areas which drive mainstream profitability Johnson and Johnson have also recognised the importance of diversification as key to longevity and success. Standard developments in commercial and medical areas are important however the business has also adopted strong levels of investment for surgical products, bio-tech ventures and internet publishing. These developments will secure market presence in new fields such as surgery whilst research and development in bio-tech although has been criticised for economies of scale in the long term can provide important progression for the industry.

Coupled with the external markets Johnson and Johnson have also worked extensively on internal operations in order to retain sales participation and profit. Through investment in repackaging and waste management Johnson and Johnson were able to ensure competitive market prices where necessary, reduce outgoings and increase profit margins and indicate a willingness to be involved in ecological issues by downgrading to sustainable and recyclable materials. Further operational changes to finance systems have enabled personnel to spend more time managing budgets and supply chain through the introduction of systemic analysis and removal of manual tasks time is better spent to enable productivity which will result in improved profit levels.

Challenges and Outlook

This industry relies heavily on technology and research and development in order to progress and there can be a fine divide between the profit and loss considerations and the need for investment. Johnson and Johnson as a large organised brand appear to have the benefit of successful branding and established links to market which enable the research to be completed alongside. The operating model of promoting health and well being whilst appearing to be in conflict with the basis for the core domestic markets enables the business to make strong marketing presence and work within medical fields for prevention and cure which whilst using technological advances ensures longevity for the business.